How to Adjust Risk Metrics and Payments to Protect High-Complexity Patients’ Care

By Bill Bithoney & Karen Meador

As payments to physicians and provider organizations increasingly are based on outcome metrics, and as ACOs form to care for patient populations, the healthiest and lowest-risk patients will bring the highest margins to providers unless there are more comprehensive risk adjustments to the metrics and payments. Patients who have the most complicated medical conditions and are the most fragile may find it more difficult to access potentially beneficial care unless metrics are fully adjusted and payments are increased to account for the higher risks and greater expenses that providers take on with such patients.

We previously saw similar challenges for high-risk patient groups when providers became burdened with the increased costs of malpractice insurance and the increased concern over poor outcomes from caring for high-risk patients. Women with high-risk pregnancies have been among those most challenged to find a provider who will provide the care they need. Obstetricians have retired early, switched to gynecology only, moved their practices to lower-risk regions, and have limited their practices in other ways to reduce their risks, reduce their malpractice insurance costs and to maintain a sustainable financial margin.

We have also observed payers structuring their plans to serve and attract the healthiest patients while discouraging the sickest patients to enroll with them. For example, Medicare Advantage plans have offered free gym memberships and other perks that are most likely to be attractive to healthier seniors. Studies have shown that Medicare Advantage plans have lower costs per patient than traditional Medicare, and while some of this may be explained through better efforts by Medicare Advantage plans to keep patients out of emergency departments and hospitals, it appears that selection of healthier patients is a factor.

Risk Adjustment in Action

The Centers for Medicare & Medicaid Services use risk adjustment in the Value-Based Payment Modifier Program in an effort to correct for differences in patient level risk factors that impact quality and cost metrics independent of factors within the physicians’ control. Beneficiary age, clinical risk factors, gender and specialty cohort are variously used to adjust several types of measures for readmissions, preventable hospitalizations and other metrics. Per capita cost measures are adjusted based on a risk score that is calculated from CMS’ Hierarchical Condition Categories (HCC) model, which for new enrollees is based on their age, sex and disability status, and which for continuing enrollees also includes Medicaid enrollment status and 70 clinical conditions that include both chronic medical and behavioral disease states. The Medicare Spending Per Beneficiary measure is adjusted for age and severity of illness.

Many have argued that the effects of poverty on disease are fully accounted for in the near term by patients’ present disease state. However, apart from the Medicaid classification for the per capita cost measure, adjustments for socioeconomic status are lacking, and this may result in insufficient risk adjustment. For example, patients who are poor are more often obese and have poor diets associated with an increase in diabetes and its attendant comorbidities of cardiac disease, hypertension and stroke. Current risk adjustments for Medicare patients often use Med Par diagnoses as well as HCC codes and value-based purchasing metrics. However these cannot fully account for patients who are under socioeconomic stress and who, for example, skip their medicines post hospital discharge, resulting in poor clinical outcomes and readmission.

Clinicians who care for such patients should not be penalized for doing so. To date, however, we lack an all-encompassing risk adjustment measure that takes into account a patient’s classic medical diagnoses, mental health diagnoses and socioeconomic status.

For those adjustments that do exist, it will be important to have ongoing analyses through samplings of actual patient metrics and provider reimbursements to ensure that these risk adjustments are adequate to compensate providers for the additional time, risks and costs in providing care to the medically fragile and under-resourced patients. If risk adjustments do not fully compensate physicians and other providers for providing care to the most medically complex patients, we expect providers to attempt to find legal ways to attract patients likely to have the best outcomes and to decline to treat those they deem high risk.